When a lender is reviewing a rate stack, there are a range of rates to choose from. It's so funny to me when people call and say "What's your rate?"...there are so many variables and OPTIONS for each scenario. There isn't just one rate to choose from. Most of the time, when a lender responds to the "What's your rate" question, they look for the rate at par. Par is the rate that doesn't cost anything (discount points) and doesn't come with credit (lender credit). It's the market rate. Often, people ask about discount points, or paying points it's often called, in order to get a lower rate and payment. That works for folks that have extra money to spend or maybe seller credit to apply, but what about folks that are short on cash?

Did you know that you can choose to go with a higher rate in order to get credit from the lender to cover your closing costs or at least a portion of them? Who would go with a higher rate? Someone who doesn't have extra cash to spend and who knows that rates will come down and they won't be stuck with that rate forever; they can refinance! Liquidity is important! We used to use lender credit ALL THE TIME, in fact, when people talk about a no cost mortgage, that is how the fixed fees are covered. There is no such thing as a no cost mortgage. Title companies, appraisers, insurance companies, county recorders...none of them work for free so the fees have to be paid somehow. That happens through lender credit. 

Here's an example of what a rate sheet looks like. The rates are on the far left and the cost/credit is on the far right. If it appears red, that's a COST for the rate, if it appears green, that is a lender CREDIT that would come back to the buyer.